1 The Bothnian Arc By Tom Donnelly, Clive Collis and Martin Donnelly, Coventry University & Martti Hyry University of Oulu. Abstract: The countries of Northern Europe, Sweden, Finland and Norway lie of the outskirts of the Northern European economy. Their land mass is greater than that of France and Germany combined, but their relative population is tiny by comparison. This paper looks at the attempts made by the northern most parts of these countries, especially, Finland and Sweden to effect a degree of cooperation that would enable their respective economies to compete internationally. This, it is hoped, will be achieved through a discussion of the potentialities of the Bothnian Arc Association to promote interregional cooperation to both boost local economic development and to improve living standards. Keywords: industrial clusters, infrastructure, higher education, tourism, European Union A hallmark of the EU is the degree of regional diversity that stretches from its Mediterranean South to its Artic North. Such diversity poses a number of geographic, economic, social and political problems, forcing member states individually and collectively through the EU Commission, to develop polices that both attempt to mitigate regional economic and social inequalities as well as give rise to new opportunities. The intention is for areas, regions and countries in the Community’s more peripheral outposts to improve their infrastructures and develop industries and institutions that enhance their overall competitiveness and so play as full a part as possible in the life of an increasingly integrated EU (Armstrong, and Taylor, 2000). 2 Debate continues whether or not regional policy is desirable and to what extent is should be centralised or devolved to member states individually or in concert. For the purposes of this paper, however, both policies are at work, though in this case the argument for decentralisation as a factor encouraging local participation is strong, given the relative geographic isolation of the countries participating in the Bothnian Arc project . The Bothnian Arc project began in 1998 and primarily involved the cities and towns around the coastlines of Finland and Sweden promoting policies that would enhance the economic prospects of the communities situated along the respective littorals. Since then the project has expanded economically though not institutionally to incorporate the Barents regions of North Norway and North West Russia. The purpose of the article is not to attempt an evaluation of progress made so far but to investigate the concept of cooperation between these respective areas and to show what might be in the future in a qualitative rather than in a quantitative sense.. Firstly, after a brief review of EU Regional Policy. The paper will explore the reasons why the Arc was formed. It will then look at how it has expanded and examine current policy. Literature Review. Regions are not readily defined as they do not necessarily fit into discreet categories. Regions may or may not be spatially coherent areas. They may comprise of a town or a municipality or a vast territory which is transnational with no clear cut boundaries like the Bothnian Arc. Similarly, some regions can be described as homogenous with 3 a clear national and linguistic identity which has been stable over a long time. Others may be described simply as functional with their main unifying feature lying in economic linkages.. Further subdivision leads into discussion of polycentric regions which contain several urban sites in which inter-city or area collaboration takes place at regional, national and supranational levels. Such nodes are often linked through their labour markets, service sectors and cultural activities. Though cities etc. may compete for resources in such regions, this needs not necessarily be negative, but stimulating in outcome. Finally, there are ‘development corridors’ which follow river valleys and which can be enhanced by both road and rail transport. (Matteson, 2004) All of these aspects to a greater or lesser degree are to be found in the Bothnian Arc and its neighbouring Barents Sea Region In recognition of the different types of regional problems that exist within its borders the EU has devised a policy around six main principles. These include the Structural Funds which are targeted at the Community’s most vulnerable and disadvantaged areas: lagging regions, declining industrial regions, rural areas and low population density areas. The latter category fits in with Objective 6 and is relevant to the Nordic countries of Finland and Sweden. Much of the EU’s approach was based on partnership as there was no reason why the Community should relieve individual countries of their regional responsibilities. Moreover, given that regions are notoriously difficult to define, it was logical that countries were expected to deal with problems through their own regional instruments. In other words, this was the principle of subsidiarity as expounded in the 1992 Maastricht Treaty. Additionally, there is the expectation that the authorities in different countries should harmonise their policies to their mutual benefit when dealing with common problems, especially 4 when these problems are shared due to proximity. It is against his background that the Bothnian Arc’s activities must be seen. (Armstrong and Taylor, 2000) The growth and development of regions has generated a considerable volume of literature and given rise to several schools of thought. Prominent among these is the role of agglomerations or clusters which has been developed by writers such as Marshall (1920), Markusen (1996), Porter (1990; 1998, 2000). Granovetter (1985) and Piore and Sabel (1984). Clusters, like regions, are not easily defined. Markusen has identified three distinct models: hub and spoke industrial districts, state anchored districts and satellite platforms. The concept of clusters, as propounded by Porter, is that they offer the possibilities of increased competitiveness and competitive advantage through productivity, innovation, increased. flexibility and the creation of new business (Porter (1990, 1998, 2000) Stress in this subject is also laid upon the role of institutions such as universities, polytechnics, research institutes and the availability of an adequately skilled labour force. When such institutions work in harmony with the local authorities and entrepreneurs, as a Triple Helix, this constellation is said to lead to a high rate of innovation in both product and process development, leading to the creation of new business as clusters evolve over time in an innovative milieu (Saxenian 1994). Often such scenarios are referred to as ‘learning communities’ in which theoretical learning is supplemented through ‘learning by doing’ or ‘learning by using’. This is considered particularly important in what is termed the ‘knowledge economy’ (Cooke and Morgan, 1998). The Nordic economies, as will be shown, are noted for their concentration on High Tech industries and fit this model relatively well, but it needs to be stressed that, despite their high wage and social costs, they are able to compete in what are often considered low tech industries such as forestry and related industries (Maskell, P, Eskelinen H, 5 Hannibalsson, I, Malmberg, A and Varne, E, 1998) Finally, there are discreet social factors that can contribute to economic success. These can be found in commonality of language, educational experiences, religious/cultural views which can often act as reinforcing mental modes of thought and behaviour (Tidd, J, Besant, J and Pavitt, K (2001) The Bothnian Arc The economic needs of Northern Finland and Sweden were identified many years ago, but it was only in the 1990s that joint action was taken to improve the situation. Launched in 1998, the Bothnian Arc, as shown in Figure 1, comprised five Finnish regions/sub regions: Kemi Tornio, Ii, Oulu, Lakeus, Raahe and the municipality of Kalajoki, which forms part of the sub-region of Ylivieska. From the Swedish side the key town and municipalities were Haparanda, Kalix, Boden, Lulea and Pitea. In effect the Arc stretches from Pitea on the Swedish side to Kalajoki on the Finnish. Figure 1: The Bothnian Arc Source: Programme: The Bothnian Arc of Knowledge (2002) 6 The Arc though is not geographically bounded and looks to areas such as Russian Karelia and Murmansk in North West Russia as unofficially being within its sphere of influence. Essentially, the narrowest point of the Arc is the intersection of the Baltic Sea, via the Gulf of Bothnia, and the Barents region through to the Barents Sea, which includes North Norway and North West Russia, Thus the Arc is a highly strategic point between the Baltic and Barents areas. A board was set up to manage the Arc Association and, in addition to its municipal representatives, were members from industry and commerce plus members from the Universities of Oulu (Finland) Lulea (Sweden) and later the University of Lapland from Rovaniemi. These were supplemented by members from Oulu, Kemi-Tornio and Rovaniemi Polytechnics in Finland and the School of Music in Pitea and the School of Wood Technology at Skelleftea from Sweden. Finally, offices were established in Haparanda and in Oulu. Consequentially, it needs emphasising that the Bothnian Arc Association is not a government body and so has no executive power, but is primarily a collection of cities and town that work on behalf of the region as a whole. With a population of between 600,000 and 700, 000